Category Archives: Blog

Tax Incentives for Research and Development in Artificial Intelligence

Tax incentives for artificial intelligence developments

Is your company in one of the industries predicted by Forbes to be revolutionized by artificial intelligence? If so, your competitors are probably taking advantage of the government programs to reimburse a large portion of costs related to testing or implementing AI innovation technology to help them succeed.
 
Companies engaged in cybersecurity, health care, manufacturing and construction and more are enlisting AI innovation in their businesses with anticipation of becoming leaders in their fields, and many are taking advantage of government programs to cover most of the costs. And, the list of companies grows, touching almost every aspect of life – everything from chatbots in retail stores to making restaurant recommendations and analyzing risk factors in loan applications.
 
There are several factors that make artificial intelligence or machine learning projects more complex in terms of substantiating a SR&ED claim. Firstly, artificial intelligence and machine learning are a relatively new development and the speed of growth and change is this field is rapid. Secondly, it is not always clear what is new or innovative about an AI project.

We can help you overcome these challenges with an approach that focuses on technical improvements and on the challenges associate with real world application of the development. The majority of AI projects are challenging due to limitations of data and other factors that make moving from established theory to a working reality. Although the whole project may not be considered SR&ED, parts of it, as well as supporting activities may well be.

R&D funding is not limited to new AI innovations, but a number of related activities involving overcoming technical challenges including; training AI systems to use data and make distinctions; prototyping to identify enhancements to existing model designs; designing modifications that improve the capabilities of known algorithms and models, and more.
 
If you have attempted to design, analyze, develop, improve, or implement some of your programs, techniques, products, or devices, the activities you performed may qualify for the SR&ED tax credit program.

Contact us at info@enhancedcapitalrecovery.com for a free consultation today!

Research and Development Funding for Business Innovation

Provincial and federal governments recognize that innovation requires financing.  They are also quite aware of the significant economic value of supporting business innovation and therefore, have research and development funding for business innovation programs in place to put their money where their mouth is.  To put this in perspective, the federal and provincial governments combined to provide $7.01 billion in R&D funding in 2012.

Depending on your project, innovation financing can come in various forms, including tax credits, grants and more.  The following are some of the major sources of innovation financing that your business should consider.

Federal tax credits

federal tax creditsApplying for an R&D tax credit often involves an intensive amount of documentation and follow-through to demonstrate you satisfy the program requirements.  All things considered, however, the size of the credit available can make applying worth your time.

For instance, the Canada Revenue Agency’s Scientific Research and Experimental Development program, commonly known as SR&ED, provides tax credits of up to 35% of qualifying expenditures such as salaries, capital costs, consulting fees and materials. For most SMEs, these investment tax credits take the form of a cash refund.

To be eligible, the Canada Revenue Agency (CRA) determines whether or not your project meets the Scientific Research & Experimental Development (SR&ED) specifications using the following three criteria:

  • Technological Advancement – furthered technical knowledge
  • Technological Uncertainty – faced technical challenges or uncertainties
  • Technical Content – went through an iterative process to try and overcome those challenges or uncertainties

These 5 easy questions (see the full article 5 easy question guide for SR&ED eligibility for more detail) should help you decide if you have a potential claim.

1.  “Was there a scientific or a technological uncertainty that could not be removed by standard practice/engineering?”

2.  “Did the effort involve formulating a hypothesis specifically aimed at reducing or eliminating the uncertainty?”

3.   “Was the adopted procedure consistent with the total discipline of the scientific method, including formulating, testing, and modifying the hypothesis?”

4.  “Did the process result in a scientific or technological advancement?”

5.  “Was a record of the hypothesis tested and results kept as the work progressed?

Provincial and territorial R&D tax credits

With the exception of except Prince Edward Island, the Northwest Territories and Nunavut, every provincial and territorial r&d tax creditsprovincial and territorial government has its own R&D tax credit.

Like the federal government program, the administrative details and eligibility of spending can be complex.  Enhanced Capital Recovery can help you decide which R&D tax credits you should apply for.

Grants for R&D

Depending on your business sector, you could have access to federal government grants and financial assistance for your R&D.

Grants targeting specific industries across Canada can be found at the Canada Business Network. There are also many provincial and territorial grants and financing programs. These can also be found on the Canada Business Network portal or by contacting your provincial or territorial government.

Need help building a Canadian government funding strategy? 

Although R&D programs are not highly visible, assistance is available for those who know where tax strategyto find it.

When it comes to preparing an application, working with a SR&ED consultant lets you invest your time in other areas of the business and ensures that day-to-day operations will not be disrupted.

Enhanced Capital Recovery is here to help you from beginning to end of the process.  We often discover non-intuitive expenses and activities that are routinely overlooked or unclaimed as well as help you implement a tracking tool to simplify the process of your future claims.

With zero upfront fees, there is absolutely no risk to your business to access the proven effectiveness of our team!

Contact us today for a free, no-risk consultation.

5 Software Development Trends to Watch

As anticipated, 2016 produced innovative trends in the areas of big data and cloud computing, withInnovation trends 2016 continued development in mobile spheres and “wearable” technology becoming a game-changer across a multitude of industries.

While we will see these trends continue into the new year, we expect 2017 to hold even more innovation in store. Continue reading to learn the 5 software development trends to watch for in the year to come.

Smaller teams, increased collaboration

While DevOps (development operations) is not a new trend in software development, collaboration between developers, engineers, and IT specialists continues to expand, with more tools becoming available to facilitate group work.

Open source tools like Docker and Apache have existed for some time to assist DevOps teams. Over the next year, watch for a rise in purpose-built applications to bridge the workflow of entire teams in real time.

Priority on privacy

Data breaches provided plenty of news over the past year, from Yahoo!’s 500 million compromised accounts to major cyber attacks on LinkedIn, Tumblr, NSA and, perhaps most notably, presidential candidates.

The spotlight is on digital security now more than ever, and software developers have set privacy as a top priority. Rather than assigning a security specialist to teams, some firms are now training all developers in security and privacy so as to safeguard development at all levels. Additional tools like IBM AppScan are likely to surface to aid this trend.

Subscription over Ownership

With improved online capabilities around the world making way for cloud computing, we continue to see the rise of subscription-based sales over the traditional purchase of software.

Adobe and Sage are two big names that now provide their software via download, offering a variety of subscription packages to users. Developers will be called on to advance this framework and to improve applications for online customer support.

Predictive Analytics

Creating and using big data has been a remarkable achievement of recent years, but it has been up to the user to interpret the data and employ it in decision-making.

Despite conversations as to the value of predictive analytics, we can now look for software to assist with this process. Oracle and IBM are making headway on this front, and a variety of industry-specific tools are likely to be released throughout 2017.

Real-time elements

Mobile technology has been around for some time now, but our increased dependence on mobile devices is creating ripple effects that should not go unmentioned. Cell phone and tablet usage has now overtaken that of the computer—a trend that is envisioned only to continue.

In an age where consumers expect instant results, the pressure is on websites and applications to feature more real-time elements. Look for developers to focus in this area over the following year.

If the achievements of 2016 were any indication, the year to follow should provide an abundance of innovation in software development.

Innovation funding for software development

Is your company developing software in-house, hiring a consulting company to design custom software, or are you a software developer?  Many of these activities are eligible for R&D funding in Canada through programs like SR&ED.  The following Checklist for Software Developers can help get you started.

Our experienced experts at Enhanced Capital Recover will be able to identify all of your eligible projects and assist you in recovering SR&ED tax credits to which you are entitled.

Even if you currently complete your own R&D tax credits application, our experts will be able to validate and optimize your scientific descriptions as well as your eligible expenses. We will assist you in maximizing your return on investment while minimizing the risk of audit by Revenue Canada.

With our contingency based fees, we completely eliminate the risk of making a claim. We do the work up front and only get paid when your refund is secured.  Contact us today for a free, no obligation consultation.

 

5 Easy Question SR&ED Eligibility Guide

The SR&ED program is a tax credit system designed to encourage Canadian businesses to SR&ED eligibility guidemake technological and process improvements and make Canada a world leader in advanced technology.

It’s an amazing financial opportunity for businesses to take advantage of across a wide variety of industries, but eligibility for the program can be confusing.

This article is intended to take some of the mystery out of the process of determining whether your R&D project is SR&ED eligible.   So, if you’re wondering, “Is My Project Eligible for SR&ED funding?,” this 5 easy question SR&ED eligibility guide will help you decide whether or not to move forward with a claim.

What is the SR&ED Program?

The scientific research and experimental develop program (SR&ED) is an R&D tax credit incentive offered by the Federal Government of Canada which pays more than 20,000 eligible Canadian Controlled Private Corporations in excess of $3 Billion (CDN) each year.

Basic SR&ED Eligibility

Almost any Canadian company can be eligible to apply for Scientific Research and Experimental Development (SRED).  Here are the basic eligibility criteria from a company perspective:

  • Your research & development took place within Canada
  • You have proof of expenditures related to the claimed projects, for example T4s, and/or invoices
  • You have ownership of the Intellectual Property resulting from the project
  • You are in good standing with government financial reporting
  • Your project expenses were incurred within 18 months of the fiscal year-end as of filing

The definition of technological advancements can be interpreted broadly and therefore is not limited to specific industries.  A wide range of industries submit SR&ED claims each year, including:

What many businesses don’t realize is that some of the routine business challenges they face each year could be eligible for the SR&ED tax credit.  The following 10 SR&ED examples show different cases of its application.

5 Easy Question SR&ED Eligibility Guide

The Canada Revenue Agency (CRA) determines whether or not your project meets the Scientific Research & Experimental Development(SR&ED) specifications using the following three criteria:

  • Technological Advancement – furthered technical knowledge
  • Technological Uncertainty – faced technical challenges or uncertainties
  • Technical Content – went through an iterative process to try and overcome those challenges or uncertainties

This is great, if you understand what they mean by it!  The following 5 easy question SR&ED eligibility guide should help you arrive at the right conclusions.

1.  “Was there a scientific or a technological uncertainty that could not be removed by standard practice/engineering?”

This is often misunderstood.  It is not that a product or process is “new” that makes it SRED.  Developing a new product may not necessarily be a SR&ED eligible product unless some technological uncertainty was overcome in the process.  If a new widget however, used a new manufacturing process or material that needed experimentation to develop, it’s a sign that technological uncertainty existed.  Even if the experimentation ended in failure, this part of the project could still be claimed as a SRED.

2.  “Did the effort involve formulating a hypothesis specifically aimed at reducing or eliminating the uncertainty?”

Further to the above point, if there is an unknown factor in developing a product or service, it stands to reason that there will be one or several approaches that will be tested in order to overcome it.  Following the scientific method of hypothesis testing indicates a SR&ED project and should be documented to support the claim.

3.   “Was the adopted procedure consistent with the total discipline of the scientific method, including formulating, testing, and modifying the hypothesis?”

As in any iterative process, a hypothesis must be tested and modified based on the results.  Again, it shows the CRA that a scientific model was followed and that a true technological uncertainty existed.

4.  “Did the process result in a scientific or technological advancement?”

Whether successful or not, the testing of a hypothesis will lead to a conclusion – hopefully to a solution.  The solution is considered a technological advancement if it means you are now able to complete a process, product or service that you previously were not able to.  If the testing does not lead to a successful solution, the R&D work done is still SR&ED eligible.

5.  “Was a record of the hypothesis tested and results kept as the work progressed?

Since the process involved in SR&ED work, i.e. the scientific method, is important in determining the eligibility of a claim, it’s important to document it completely.  Time tracking of individuals on a project is especially critical to document accurately as wages associated with a SR&ED project are one of the main components of a claim.

Contact us today for a free, no-risk consultation.

Since claiming SR&ED is complex and you do not want to reviews or rejections of your claim it is wise to have the support of a SR&ED professional. Many of our new clients see a significant increase in their SRED refunds when using our end-to-end services.

We’ll help you catch non-intuitive expenses and activities that are routinely overlooked or unclaimed as well as help you implement a tracking tool to simplify the process of your future claims.

With zero upfront fees, there is absolutely no risk to your business to access our time proven support!

Calculating SR&ED Investment Tax Credit

If your company is making a SR&ED claim this tax year, it is beneficial for planning purposes to calculating SR&EDhave an idea of the amount you can expect.  This article will give you a case study which demonstrates a simplified approach to approximating your R&D tax credit by calculating SR&ED.

SR&ED Claims require detailed reporting which may not be intuitive to your R&D team or accountant

Since claiming SR&ED is complex and you do not want to reviews or rejections of your claim it is wise to have the support of a SR&ED professional. Many of our new clients see a significant increase in their SRED refunds when using our end-to-end services.  We’ll help you catch non-intuitive expenses and activities that are routinely overlooked or unclaimed as well as help you implement a tracking tool to simplify the process of your future claims.  With zero upfront fees, there is absolutely no risk to your business to access our time proven support!

How much is my Investment Tax Credit (ITC) worth? Calculating SR&ED

The accounting and ITC calculation are relatively complex processes as many factors are taken into account to determine the final value. The following case study provides an example of some of the variables that must be considered:

A food manufacturer conducted SR&ED eligible work and 50% of his time as well as 25% of his engineer’s time was spent on SR&ED. He received remuneration of annual salary of $120,000 from his professional corporation and his engineer received a total salary of $100,000. The steps in the ITC calculation are as below:

Step 1-Salary base (SR&ED portion of salary): $120,000 x 50% = $60,000; $100,000 x 25% = $25,000

Step 2-Overhead and other expenditures (prescribed proxy amount 55%): $85,000 x 55% = $46,750

Step 3-SR&ED expenditures: $85,000 + $46,750 = $131,750

Step 4-Alberta ITC (10% of SR&ED expenditure): $131,750 x 10% = $13,175

Step 5-Federal ITC (35% of SR&ED expenditure): ($131,750 – $13,175) x 35% = $41,501.25

(Note:  The Alberta ITC is considered government assistance so the federal government will not award an SR&ED ITC on this amount. The Alberta ITC must be removed from the calculation prior to calculating the federal ITC.)

Step 6-Total SR&ED ITC: $41,501.25 + $13,175 = $54,676.25

A shortcut is to multiply the salary base by 64.3% to come up with the total SR&ED ITC.

How can I maximize the amount of my ITC?

As shown in the calculation, the Investment Tax Credit rates (federal 35%, Alberta 10%) and prescribed proxy amount (55%) are stipulated by Government.

In order to maximize the amount of tax credit, the factors that can be planned and optimized are research time and salary. So, in the context of maximizing the SR&ED tax credit, the tax planning strategies you have in place may need to be revised.

That’s where Enhanced Capital Recovery’s SR&ED team can help. Our financial specialists provide planning strategies for organizations conducting SR&ED projects in order to maximize claims and avoid reviews and delays.

Contact us today for a free, no-risk consultation.

Food Industry Research and Development Funding Examples

When looking to future opportunities in the food industry, kale and quinoa may be yesterday’s research and develpment in the food industry funding examplesnews.  What does that future consist of?  Would you believe tiny yellow, green, red or orange seeds of the legume family, called pulses?  In fact, pulses are poised to be the next big food trend.  In this article we’ll explain this trend as well as provide some food industry research and development funding examples to show you how your company can maximize all funding opportunities.

What are pulses?

The term “pulse” refers only to the dried seed of the legume family. The United Nations Food and Agriculture Organization (FAO) recognizes 11 types of pulses, with the most common varieties being dry beans, dry peas, chickpeas and lentils.

With 2016 named the International Year of Pulses, the spotlight shines on a food crop largely ignored by food processors in North America.  Despite this, pulses are a huge crop for Canadian farmers and exports.  In fact Canada is the world’s largest producer and exporter of lentils and dry peas to countries such as India, Turkey, Egypt, China and Bangladesh. In 2015 Canada exported six million tonnes of pulses worth nearly $4.2 billion to more than 150 markets around the globe, according to Pulse Canada, a national industry association.

What are the new applications of pulses in food products?

A credit to new research and development, however, pulses have revealed themselves to be versatile ingredients.  As consumer awareness continues to grow around the nutritional benefits of pulses, the number of products fortified with pulses will continue to expand.

Already food manufacturers have added pulses or pulse products to innovative food products such as breads, cereals and baking products; pasta and sauces; meat and dairy-free alternatives; snacks; and beverages.

Pulse R&D receive close to a million dollars in Federal funding

While a large portion of pulses produced in Canada are intended for exports, the last decade has seen a focus on enhancing secondary processing, thanks to organizations such as the Canadian International Grains Institute. Ten years ago the non-profit launched a pulse-processing and specialty milling facility and a project that assessed pulse quality with developing methods for dehulling and splitting pulses effectively and efficiently.

This early work laid the foundation for investigating milling methods and how they affect the functionality of pulse flours as ingredients in food product applications such as baked goods, Asian noodles, extruded snacks and batter-coated products.

The Canadian International Grains Institute latest project, which received a funding boost of over $950,000 from the federal government last year, looks at the nutrition of pulses how it translates to applications in food.

Examples of food innovation

Examples of innovations using pulses include looking at bean flours as an egg substitute in baked goods.  Some food manufacturers have already been able to develop several recipes eliminating eggs, including a completely vegan, nut-free, bean-flour based French macaron.

Another product is called “Fiberger,” an innovative, nutritious, high fibre meat extender made from red lentils, green peas and chickpeas. Created by Caileigh Smith and Evelyn Helps of the University of Guelphm Fiberger can be used in many different ways. “For example, adding Fiberger to patties and meatballs can reduce the amount of meat required, while adding fibre and protein to enhance the nutrition of the meal. Fiberger can also help families decrease their food costs by giving them a healthy, affordable ingredient to add to their protein dishes.”

Get funded today

Are you an agribusiness or food manufacturing company?  To find out how your organization’s food and agriculture activities could result funding, contact Enhanced Capital Recovery today for a no-risk consultation.

The Genius Behind Pokemon and the Lessons About Innovation

The Pokémon phenomenon is too big for anyone not to notice. Pokemon Go hit No. 1 in the App pokemon goStore almost immediately, and it’s changed the behavior of thousands of people, who have literally left their desktop screens and televisions to roam their neighborhoods in search of Pokémon to capture.

The game has gotten so big, it’s even been reported to be more popular than the previously most downloaded app, Tinder.  According to Digital Vision, “Pokémon Go is installed on more U.S. Android devices than Tinder.” This just two days after its release!  And not only has it achieved more downloads, it’s also far exceeding other apps in terms of daily active users – an impressive 60%!

For anyone in the innovation space, this phenomenon begs some important questions, as well government fundingas some essential notes about government grants and financing opportunities for innovators and entrepreneurs: What is the innovation driving the game’s success and what lessons about innovation does it shed light on(especially in the digital age)? Where is this technology heading next, and what are the opportunities for innovators and entrepreneurs?

What is the innovation behind the Pokémon phenomenon?   

The majority of onlookers point to augmented reality (AR) as the novel factor driving the Pokemon phenomenon.  Examining the game in more depth, however, you will find that AR actually plays a minimal role in its success. The only time you use the camera for an AR experience is when catching a virtual Pokémon. Many gamers, in fact, turn this feature off to save battery life and make it easier to catch the Pokémon. Not a slight on the role of AR as part of the game’s success, but what really makes the game interesting is the use of geolocation data – real-time maps with key locations highlighted all around you.

How this came about is relevant.   The game was built on many years of geocached data of real-world objects and locations from a game called Ingress, built by Pokémon Go developer Niantic Labs.

In the early days of Ingress, Niantic formed a beginning pool of portal locations for the game based on historical markers, as well as a data set of public artwork mined from geo-tagged photos on Google. They then asked Ingress players to submit places they thought were worthy of being portals. 15 million submissions later, 5 million of these locations were established worldwide. The Ingress portal data set was so robust, it was chosen as the starting point for Pokémon Go.

What does this say about how innovation happens?

The big lesson here is leverage.  The first levers in this success story are the tech and data that was already established: GPS, Google Earth.  Then a critical mass of users to create the ubiquitous platform: the smart phone.  Then game players themselves are leveraged to create user generated content on a global scale.  Ostensibly the innovation in Pokemon Go is AR, but practically speaking the real innovation was leveraging what was already there in a brilliant way.

What does the Pokémon phenomenon say about where tech is heading?

Without all of the levers being in place, this game would not have been possible –and no one would have been thinking about the potential of exploring geo-location data in this way.

Now that it has been done, it’s opened up a new avenue for similar developments. It’s interesting to think about how other locations or destinations could use this concept. Think about Disneyland, for example, having a mini-game inside the park and allowing people to collect Disney brand characters, battle for locations, or anything else they dream up as a virtual and augmented experience.

Innovators and entrepreneurs get your pencils out and start scratching out ideas.  It’s not about repeating what Pokémon Go has done, but about learning the lesson from how they innovated.

Use what is already there in a new way.

Financial leverage for innovators and entrepreneurs

Keep building and make plans to build more.  We’re lucky to have a rich government granting and financing environment in Canada to support these efforts.  The following is a bit about the world of financial leverage for innovators and entrepreneurs.

Contact us for a free consultation to learn more about R&D funding opportunities!

Government Grants and Financing for Business

Whether your business is a start-up, or an established business looking to grow, there are a wide research and development government financingrange of government grants and financing available in Canada.  The following is a comprehensive list to get your research started.

One funding model to highlight is the Scientific Research and Experimental Development tax credit (SR&ED).  Quite simply, it is one of the most robust models which supports innovation for the following reasons:

  • over $3.47 billion paid out in 2015
  • the definition of research and development is broad
  • spans a wide range of activities and industries

Who is Eligible for R&D funding?

Almost any Canadian company can be eligible to apply for Scientific Research and Experimental Development (SR&ED).  According to published survey results by Canada Revenue Agency, approximately three-quarters of companies that apply to the program report annual revenue of $50 million or less – and there is no specific industry that this funding is limited to.

The definition of technological advancements can be interpreted broadly and therefore is not limited to specific industries.  Generally a wide range of industries claim SR&ED, including:

What many businesses don’t realize is that some of the routine business challenges they face each year could be eligible for the SR&ED tax credit.  For example:

  • A cached turn-by-turn GPS navigation was created to solve drivers’ difficulty of navigating roads outside of cell phone service range
  • A manufacturing company, who makes complex medical devices, wanted to speed up their line to reduce the per item completion time.
  • A pharmaceutical company develops a new lightweight casing for medicinal capsules but discovers over time that it is not leak-proof and so can’t be used (note: unsuccessful R&D projects are still eligible for the SR&ED tax credit)
  • An engineering and manufacturing company develops and modifies plastic molding technology so that it can protect testing components from the hostile oil and gas field environments.

All these activities, and many more business processes like them, result in knowledge improvement for the company and its staff and hence are recognized as SR&ED by the government and are eligible for an SR&ED tax credit.

Many Canadian corporations in your industry, including your competitors, have received SR&ED funds to develop additional R&D projects and build their knowledge base. For companies with annual revenue of $10 million or less, the vast majority credited the SR&ED program with improving their cash flow and profits.

A Comprehensive List of Government Funding

If SR&ED is not the right funding model for your business, Government departments and agencies provide a plethora of financing options such as grants, contributions, subsidies, and loan guarantees.

Find out what type of government financing may be available for your business.

Browse government financing by type

Explore opportunities to receive public funds to help springboard your business venture.

Examine these loans and other borrowing possibilities for your new or existing business.

Having trouble securing a loan for your business? A government-backed loan guarantee could help you attract creditors.

Looking for more return on your business expenditures? Browse potential tax benefits that could help reduce overhead.

Are high wage expectations making you reluctant to put up that Help Wanted sign? A wage subsidy program can put the perfect employee within your reach.

Searching for a long-term financial solution for your business? An equity investor may be willing to bank on your potential.

Contact us today for a free, no risk consultation!

 

 

R&D Trends and Challenges in the Pharmaceutical Industry

As one of the most research and development driven industries, the pharmaceutical industry has trends in pharmaceutical r&dlong been committed to the development and testing of new treatments and cures for patients suffering from a wide variety of ailments.

A number of recent breakthroughs in treatment for diseases like Hepatitis C, Ebola, malaria and even Alzheimer’s, are fueling an era of increased research and development in the pharmaceutical industry.

With more than 7,000 innovative drugs in development worldwide by pharmaceutical companies and over $500 billion invested in R&D since 2000, new advances in regenerative medicine and diagnostics are an area of tremendous growth. (“Innovation In Drug Research And Development By The Pharmaceutical Industry”)

R&D Trends

One important trend has been towards curing rarer diseases, with smaller patient populations.  To improve services these people, governments have sped up the approval process for conditions where there is no existing treatment.  This is leading to an increase in new treatments.

Another R&D trend occurring in the pharmaceutical industry is a movement toward reduction of patent protection.  This being the case, in order to continue competing globally, there is a need to constantly develop and improve drugs, which may lead to many instances where there are technological obstacles that organizations run into – areas where testing and experimentation to overcome these obstacles is necessary.

These instances are where the Scientific Research & Experimental Development (SR&ED) program comes in to assist you with the recovery of funds spent on testing and experimentation.

Challenges which lead to SR&ED

During drug discovery, often carried out by universities and research facilities, challenges include the identification of an organic compound that could inhibit or activate a biochemical reaction and its organic synthesis in order to achieve an acceptable yield with little or no side products.

During drug development, non-medicinal ingredients must be formulated with the active ingredient in order to achieve the desired effect.  These activities would normally qualify as research and development under the SR&ED program.

More Eligible SR&ED projects

Your company may be working on SR&ED eligible projects without being aware that it qualifies.  To give you some examples of SR&ED eligible activity in your industry, here are some more activities that likely qualify:

  • experimentation with the synthesis of a compound
  • identification of adverse effects during pre-clinical studies or clinical trials
  • improvement of drug stability
  • improvement of drug affinity

How to take advantage of the opportunity

In Canada, the pharmaceutical industry is increasing annually – from 2001 to 2010, the GDP in this industry rose by $600 million, making Canada’s pharmaceutical market the eighth largest in the world.  If your company is involved in this growth, you may qualify for tax credits to offset the cost of your research and development.

Since SR&ED claims require technical knowledge as well and financial and accounting skills, our consultants are engineers and industry experts who understand your business and the claims process thoroughly.

Take advantage of every available resource to keep your company competitive by maximizing your R&D efforts.  Contact ECR today to arrange a free, no-risk consultation.

“Innovation In Drug Research And Development By The Pharmaceutical Industry”. Phrma.org. N.p., 2016. Web. 30 Apr. 2016.

 

Scientific Research and Development tax credits Across Canada

Canada’s research and development tax credit system is a great financial opportunity for many scientific research and development tax credits across canadabusinesses across all industries.

However, market research shows that many eligible organizations experience significant difficulty in determining which projects are eligible and as a result many go unclaimed.

Add to that complex legislation and time intensive report preparation and businesses which are otherwise eligible to take advantage of SR&ED, may not make the effort.

One of the benefits of working with a professional consulting firm is that you are informed of all possible R&D funding opportunities. Most Canadian provinces and territories offer additional R&D tax incentives at a provincial level, therefore it is essential to be informed of all opportunities and how they fit together.

Enhanced Capital Recovery’s services include application for both the Federal and Provincial SR&ED programs. As SR&ED experts, you can expect your claim to be thoroughly processed, and optimized to meet CRA’s strict expectations. In the case of a review, we will be there to assist and guide you throughout the process.

A big part of our SRED service is that contacting us for an assessment is risk free. In fact we’re so confident in our ability to accurately assess and deliver successful SRED claims, that all of our services are based on a percentage of tax credits granted.

Contact us today for a free, no obligation consultation!

The following is an overview of all Provincial and Territorial research and development tax credits across Canada as of December 31st, 2015.

“Newfoundland and Labrador

Research and development tax credit

The Newfoundland and Labrador research and development tax credit is administered by the Canada Revenue Agency (CRA) and is fully refundable at the rate of 15% of eligible expenditures.

Eligible work and expenditures:
Those that qualify for federal SR&ED tax credits

Filing deadline for claiming the credit:
12 months after the filing due date

Provincial Web site:
Newfoundland and Labrador – Research and Development Tax Credit


Nova Scotia

Research and development tax credit

The Nova Scotia research and development tax credit is administered by the CRA and is fully refundable at the rate of 15% of eligible expenditures.

Eligible work and expenditures:
Those that qualify for federal SR&ED tax credits

Filing deadline for claiming the credit:
18 months after the corporation’s tax year-end

Provincial Web site:
Nova Scotia – Research and Development Tax Credit


New Brunswick

Research and development tax credit

The New Brunswick research and development tax credit is administered by the CRA and is 15% Refundable on eligible expenditures incurred after December 31, 2002, and 10% Non-refundable on eligible expenditures incurred before January 1, 2003.

Eligible work and expenditures:
Those that qualify for federal SR&ED tax credits

Filing deadline for claiming the credit:
Not applicable

Carryback / carryforward:
Non-refundable tax credits can be carried back 3 years and forward 7 years.

Provincial Web site:
New Brunswick – Research and Development Tax Credit


Quebec

For information with respect to Quebec’s R&D tax credits, please visit the provincial Web site at:
Scientific Research and Experimental Development – Quebec


Ontario

Ontario innovation tax credit (OITC)

The Ontario innovation tax credit is administered by the CRA after December 31, 2008, and is fully refundable at the rate of 10% of qualified expenditures.

The annual expenditure limit of $3,000,000 of qualified expenditures is phased out when the corporation’s taxable paid-up capital for its preceding tax year exceeds $25,000,000 and, it is eliminated when it reaches $50 million. The expenditure limit is also phased out when the corporation’s taxable income for its preceding tax year is over $500,000 but does not exceed $800,000.

Eligible work and expenditures:
Only expenditures for SR&ED carried on in Ontario, for which the taxpayer is eligible for the federal SR&ED investment tax credit (ITC), qualify for the OITC.

Ontario rules draw on the federal SR&ED rules relating to the definition of SR&ED, qualified expenditures, the expenditure limit, and its reduction based on prior-year taxable income.

Filing deadline for claiming the credit:
Not applicable

Ontario business-research institute tax credit (OBRITC)

The Ontario business-research institute tax credit is administered by the CRA after December 31, 2008, and is fully refundable at the rate of 20% of qualified expenditures.

There is a $20 million annual cap. The cap must be allocated within an associated group of corporations.

Eligible work and expenditures:
Ontario rules mirror federal SR&ED rules regarding the definition of SR&ED and qualified expenditures other than an expenditure that may reasonably be considered to fund the payment of salary or wages to an employee of the eligible research institute who is connected to the corporation making the expenditure or a prescribed type expenditure.

Filing deadline for claiming the credit:
Not applicable

Ontario research and development tax credit (ORDTC)

The Ontario research and development tax credit (ORDTC) is administered by the CRA after December 31, 2008 and is non-refundable at the rate of 4.5% of eligible expenditures.

Eligible work and expenditures:
Those that qualify for federal SR&ED tax credits Prescribed federal form T2SCH31 must be filed to claim the ORDTC.

Filing deadline for claiming the credit:
Not applicable

Carryback / carryforward:
Carry back 3 years to reduce Ontario corporate income tax payable, but not to a tax year that ends before January 1, 2009.
Carry forward 20 years

Ontario transitional tax debits and credits

The Ontario transitional tax debits and credits are administered by the CRA after December 31, 2008.

Corporations may be subject to an Ontario transitional tax debit or be eligible to claim an Ontario transitional tax credit due to the harmonization of the two legislative acts governing federal and Ontario income taxes.


Manitoba

Research and development tax credit

The Manitoba research and development tax credit is administered by the CRA and is non-refundable at the rate of 20% on eligible expenditures incurred after March 8, 2005, and 15% on eligible expenditures incurred before March 9, 2005.

Eligible work and expenditures:
Those that qualify for the federal SR&ED tax credit

Filing deadline for claiming the credit:
1 year after the filing due date

Carryback / carryforward:
Non-refundable tax credits can be carried back 3 years and forward 10 years for tax years ended after 2003 and carried back 3 years and forward 7 for tax years ended before 2004 and applied against the Manitoba income taxes payable.

The non-refundable tax credit carry forward period has been extended to 20 years for tax years ended after 2005.

Provincial Web site:
Manitoba – Research and Development Tax Credit


Saskatchewan

Research and development tax credit

The Saskatchewan research and development tax credit is administered by the CRA and is non-refundable at the rate of 10% for all eligible expenditures after March 31, 2015, 15% for all eligible expenditures occurring before March 19, 2009, and refundable at the rate of 15% for all eligible expenditures occurring after March 18, 2009 and before April 1, 2015.

Effective for qualifying R&D expenditures incurred on or after April 1, 2012, the refundable R&D Tax Credit for Canadian-controlled private corporations (CCPC) will be subject to a maximum annual limit of $3.0 million in qualifying expenditures. Qualifying expenditures in excess of this annual limit, as well as all qualifying expenditures by other corporations, will now be eligible for a 15% non-refundable R&D Tax Credit. The non-refundable credit can be carried back 3 years and forward 10 years to be applied against Saskatchewan Corporation Income Tax otherwise payable.

Provincial Web site:
Saskatchewan – Research and Development Tax Credit


Alberta

Scientific research and experimental development tax credit

The Alberta scientific research and experimental development tax credit is administered by the Alberta Ministry of Finance and Enterprise and is refundable at the rate of 10% on up to $4 million in eligible expenditures of a qualified corporation, for a maximum credit of $400,000.

Eligible work and expenditures:
Those that qualify for the federal SR&ED tax credit and were incurred in Alberta after December 31, 2008

Filing deadline for claiming the credit:
15 months after the corporation’s filing due date

Provincial Web site:
Alberta Corporate Tax Overview – Includes SR&ED tax credit links


British Columbia

Scientific research and experimental development tax credit

The British Columbia scientific research and experimental development tax credit is administered by the CRA and is refundable for CCPCs up to 10% of the expenditure limit (i.e., $3m x 10% = $300,000) and non-refundable otherwise at a rate of 10% of SR&ED qualified British Columbia expenditures.

Eligible work and expenditures:
British Columbia rules parallel the federal SR&ED rules relating to the definition of SR&ED, qualifying expenditures, and the expenditure limit.

The tax credit is refundable for CCPCs at the rate of 10% of the corporation’s SR&ED British Columbia qualified expenditures for the tax year.

The British Columbia SR&ED tax credit has been extended to allow corporations that are members of partnerships to claim their proportionate share of the partnership’s SR&ED carried on in British Columbia, for qualified expenditures after February 20, 2007.

Filing deadline for claiming the credit:
18 months after the corporation’s tax year-end

Provincial Web site:
British Columbia – Research and Development Tax Credit


Yukon

Research and development tax credit

The Yukon research and development tax credit is administered by the CRA and is refundable at the rate of 15% of eligible expenditures. An additional 5% is available on amounts paid or payable to the Yukon College.

Eligible work and expenditures:
Those that qualify for federal SR&ED tax credits

Filing deadline for claiming the credit:
12 months after the filing due date

Territorial Web site:
Yukon – Research and Development Tax Credit

“Scientific Research And Experimental Development Tax Incentive Program”. Cra-arc.gc.ca. N.p., 2015. Web. 16 Apr. 2016.